Tech investor who got in early on the cloud software boom discusses what happens next

Key Points
  • Byron Deeter, whose firm has backed LinkedIn, Shopify, Twilio and DocuSign, said the coronavirus has accelerated the trends in software, forcing companies to deal with remote workers and distributed systems.
  • The Bessemer Cloud Index, consisting of over 50 cloud software companies, has jumped 68% this year, outperforming all major U.S. indexes.
  • Deeter said dozens of private cloud software companies are worth at least $1 billion, with many looking for the right time to go public. 
Bessemer's Byron Deeter (left) with Twilio CEO Jeff Lawson and ex-CTO Ott Kaukver
Byron Deeter

A View from the Top is a Q&A series exclusively available on CNBC Pro. CNBC reporters will regularly speak with a business leader about decision-making, investing and industry news.

The stock market's rally through a global pandemic and economic catastrophe may be the most surprising business story of the year. But for one particular sub-sector that's outperforming the broader market, the narrative is fairly straightforward.

Cloud software was seemingly created for this era of remote work. Thanks to infrastructure from Amazon, Microsoft and Google, businesses no longer need to operate their own data centers and can have employees spread across the world, accessing critical applications from laptops, tablets and phones. Hundreds of companies have developed cloud-based tools for communication, collaboration, knowledge sharing and productivity.

The BVP Nasdaq Emerging Cloud Index (ticker: EMCLOUD), consisting of over 50 cloud stocks, is up more than 70% this year, topping the Nasdaq and S&P 500, which are up 31% and 8%, respectively. The top performers in the index include video-chat vendor Zoom and content delivery provider Fastly, which have both gained more than 350%.

The index gets its name from Bessemer Venture Partners, which created the basket in 2013 and five years later partnered with Nasdaq on an exchanged-traded fund.

Byron Deeter, a partner at Bessemer focusing on cloud, says the coronavirus has been a "catalyzing moment" for the sector and a "whole class of companies that were essentially purpose-built" to guide employers through the current set of challenges and make remote work workable.

Here's the full Q&A: